ITO 27(2)(1), NAVI MUMBAI V. KRISHNAN ARUMUNGAM NAIKER, MUMBAI

ITA 1709/MUM/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8143 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 10-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJORE SATISHCHANDRA
• Assessee Lawyers: ANUJ KISNADWALA AR S I T A N
• Keywords: Accommodation entries; Retraction
• Section: 143(3); 143(1); 68; 148; 2

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE HONBLE SHRI B. R. BASKARAN , AM & HONBLE SHRI SANDEEP GOSAIN, JM ./ I.T.A. NO . 1709 /MUM/2017 ( / ASSESSMENT YEAR: 20 09 - 10 ) ITO 27(2)(1 ) 4 TH FLOOR, TOWER NO. 6, VASHI RAILWAY STATION COMPLEX, VASHI, NAVI MUMBAI - 400703 / VS. SHRI KRISHNAN ARUMUNGAM NAIKER, FLAT NO. 5, SANGEETA APPARTMENTS, NEAR DIAMONDS GARDEN, CHEMBUR, MUMBAI - 400 071 ./ ./ PAN/GIR NO. A A PPK0334G ( / APPELLANT ) : ( / RESPONDENT ) C.O. N O . 206 /MUM / 2018 ( / ASSESSMENT YEAR: 20 09 - 10 ) SHRI KRISHNAN ARUMUNGAM NAIKER, FLAT NO. 5, SANGEETA APPARTMENTS, NEAR DIAMONDS GARDEN, CHEMBUR, MUMBAI - 400 071 / VS. ITO 27(2)(1) 4 TH FLOOR, TOWER NO. 6, VASHI RAILWAY STATION COMPLEX, VASHI, NAVI MUMBAI - 400703 ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI RAJORE SATISH CHANDRA , DR / RESPONDENTBY : SHRI VIJAY MEHTA & SHRI ANUJ KISNADWALA , AR S 2 I.T.A. NO. 1709 /MUM/2017 AND C.O. NO. 206 /MUM/2018 SHRI KRISHNAN ARUMUNGAM NAIKER / DATE OF HEARING : 18/10 /201 8 / DATE OF PRONOUNCEMENT : 26/12/2018 / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE P RESENT A PPEAL AS WELL AS CROSS OBJECTION HAVE BEEN FILED BY THE REVENUE AS WELL AS ASSESSEE ARE AGAINST THE ORDER OF COMMISS I ONER OF INCOME TAX (APPEALS) - 2 5, MUMBAI DATED 26.12.16 FOR AY 2009 - 10 . 2. SINCE, THE FACTS RAISED IN THIS APPEAL AS WELL AS C.O. FILED BY THE REVENUE AND THE ASSESSEE ARE IDENTICAL, THEREFORE FOR THE SAKE OF CONVENIENCE; THEY ARE CLUBBED, HEARD AND DISPOSED OF BY THIS CONSOLIDATED ORDER. 3. FIRST OF ALL WE TAKE UP APPEAL IN ITA NO. 1709 /MUM /201 7 FILED BY REVENUE FOR AY 200 9 - 10 ON THE GROUNDS MENTIONED HEREIN BELOW: - 3 I.T.A. NO. 1709 /MUM/2017 AND C.O. NO. 206 /MUM/2018 SHRI KRISHNAN ARUMUNGAM NAIKER 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.80,55,485/ - ON ACCOUNT OF BOGUS UNSECURED LOAN, WHEN IT IS PROVED THAT M/S MERIDIAN GEMS, WHICH IS THE LOAN GIVING ENTITY, IS A BENAMI CONCER N IN THE SWORN STATEMENTS GIVEN BY BHANWARLAL JAIN GROUP. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE APPELOLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4 . AS PER THE FACTS OF THE PRESENT CASE, THE ASSESSEE IS AN INDIVIDUAL EARNING INCOME UNDER THE HEAD HOUSE PROPERTY AND INCOME FROM OTHER SOURCES. IN THIS CASE, RETURN OF INCOME FOR THE A.Y.2009 - 10 WAS FILED ON 31.03.2011 DECLARING INCOME OF RS.4,37,373/ - . THE CASE WAS PROCESSED U/S 143(1) OF THE ACT. ON THE BASIS OF INFORM ATION RECEIVED FROM DIT(LNV.) - II , MUMBAI, W.R.T. THE ASSESSEE BEING BENEFICIARY OF ACCOMMODA TION ENTRY OF RS.80.45,485/ - TAKEN FROM MERIDIAN GEMES, ONE OF THE BOGUS 4 I.T.A. NO. 1709 /MUM/2017 AND C.O. NO. 206 /MUM/2018 SHRI KRISHNAN ARUMUNGAM NAIKER CONCERNS OF BHANWARLAL JAIN GROUP IN WHICH A SEARCH W AS CONDUCTED BY THE INVESTIGATION DIRECTORATE, THE CASE WAS RE - OPENED BY ISSUING NOTICE U/S 148 OF THE I.T. ACT DATED 25.03.2014. THEREAFTER, THE RE - ASSESSMENT U/S 143(3) R.W.S.147 OF THE ACT WAS COMPLETED ON 10.03.2015 DETERMINING THE TOTAL INCOME AT RS.84,92,855/ - . AGGRIEVED BY THE ORDER OF AO, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND LD. CIT(A) AFTER CONSIDERING THE CASE OF BOTH THE PARTIES PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. NOW BEFORE US, THE REVENUE AS WELL AS ASSESSEE HAVE PR EFERRED THEIR RESPEC TIVE APPEAL/ CROSS OBJECTION . FIRSTLY WE ARE DEALING WITH THE APPEAL FILED BY THE REVENUE. GROUND NO. 1 5 . THIS GROUND RAISED BY THE REVENUE RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN DELETING THE ADDITION OF RS.80,55,485/ - ON ACCOUNT OF BOGUS UNSECURED LOAN, WHEN IT IS PROVED THAT M/S MERIDIAN GEMS, WHICH IS THE LOAN GIVING ENTITY, IS A BENAMI 5 I.T.A. NO. 1709 /MUM/2017 AND C.O. NO. 206 /MUM/2018 SHRI KRISHNAN ARUMUNGAM NAIKER CONCERN IN THE SWORN STATEMENTS GIVEN BY BHANWARLAL JAIN GROUP . 6 . WE HAVE HEARD COUNSELS FOR BOTH THE PARTIES AT LENGTH AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY LD . CIT(A). THE LD. CIT(A) HAS DEALT WITH THE ABOVE GROUNDS RAISED B Y THE REVENUE CONTAINED IN PARA NO. 9 OF ITS ORDER AND THE SAME IS REPRODUCED BELOW: - 9. GROUND NO. 3: A. IN THIS GROUND OF APPEAL, THE APPELLANT HAS AGITATED THE ADDITION MADE ON ACCOUNT OF LOANS TAKEN FROM M/S MERIDIAN GEMS WHO IS ALLEGED TO BE BOGUS CONCERN OF THE BHANWARLAL GROUP. IT IS OBSERVED FROM THE ASSESSMENT ORDER THAT THE AO HAS FORMED HIS VIEW ABOUT THE BOGUS NATURE OF LOA NS TAKEN BY THE APPELLANT FROM T HE ABOVE PARTY ON THE BASIS OF STATEMENTS RECORDED BY THE INVESTIGATION WING DURING THE SEARCH PROCEEDINGS CONDUCTED ON THE BHANWARLAL GROUP AS 6 I.T.A. NO. 1709 /MUM/2017 AND C.O. NO. 206 /MUM/2018 SHRI KRISHNAN ARUMUNGAM NAIKER WELL AS FURTHER ENQUIRIES CARRIED OUT BY THEM. ACCORDINGLY, A LIST WAS FORWARDED TO THE INCOME TAX DEPARTMENT FO R TAKING NECESSARY ACTION. THE AO OBSERVED THAT THE LIST CONTAINS THE NAMES OF ABOVE MENTIONED PARTIES, WITH WHICH THE APPELLANT HAS TAKEN ACCOMMODATION ENTRIES. B. IN THIS REGARD, IN MY OPINION, ONLY ON THE BASIS OF INFORM ATION RECEIVED FROM THE INVESTIG ATION WING REGARDING BOGUS NATURE OF ENTRIES FROM THE ABOVE MENTIONED PARTY, CANNOT BE TAKEN AS THE BASIS TO TREAT THE ENTRIES SHOWN AS BOGUS OR NON - GENUINE. THE INFORMATION RECEIVED FROM THE INVESTIGATION WING WAS A PIECE OF EVIDENCE TO INITIATE IN - DEPTH INDEPENDENT INVESTIGATION ON THE ISSUE. HOWEVER, THE AO HAS PRIMARILY RELIED ON THE INFORMATION RECEIVED FROM IN VESTIGATION WING. ON THE GIVEN SET OF FACTS AND CIRCUMSTANCES AND WITHOUT APPRECIATING THE EVIDENCES SUBMITTED BY THE APPELLANT DURING ASSESSMEN T PROCEEDINGS, LOANS SHOWN TO BE MADE FROM THE ABOVE PARTY CANNOT BE HELD TO BE BOGUS. MOREOVER, THE ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY AT HIS LEVEL AS EVIDENT FROM THE ASSESSMENT ORDER TO CONVERT THE INFORMATION INTO A CREDIBLE EVIDENCE FOR MAKING AN ADDITION. C. IT IS OBSERVED THAT THE ASSESSMENT HAS PRIMARILY BEEN MADE ON THE BASIS OF STATEMENTS OF SHRI 7 I.T.A. NO. 1709 /MUM/2017 AND C.O. NO. 206 /MUM/2018 SHRI KRISHNAN ARUMUNGAM NAIKER BHANWARLAL JAIN, SHRI LUNKARAN P KOTHARI AND SHRI RITESH SIROYA, WHILE COMING TO THE CONCLUSION THAT PURCHASES MADE FROM M/S MERIDIAN GEMS, ONE OF THE 70 CONCERNS MANAGED BY BHANWARLAL JAIN AND FAMILY ARE JUST ACCOMMODATION ENTRIES IN THE NAME OF BOGUS UNSECURED LOANS. HOWEVER, ON EXAMINING THE ASSESSMENT ORDER, I FIND THAT THE AO HAS NOT DISCUSSED THE MERITS OF THE SUBMISSIONS MADE BY THE AP PELLANT DURING THE ASSESSMENT PROCEEDINGS AND CASUALLY BRUSHED ASIDE T HE DETAILS FILED BY THE APPELLANT. IT IS ALSO SEEN THAT NO ENQUIRY WHAT SO 'EVER HAS BEEN CONDUCTED BY THE AO WHICH WOULD BRING IN EVIDENCES AGAINST THE IDENTITY AND CREDITWORTHINESS OF THE LOAN CREDITORS AND GENUINESS OF THE LOAN TRANSACTIONS. INSTEAD, THE ENTIRE FOCUS OF THE AO IS TO DISCUSS THE MODUS OPERANDI OF BHANWARLAL JAIN AS RECEIVED FROM TH E INVESTIGATION WING. BEFORE THE AO, FOLLOWING DOCUMENTS WERE PRODUCED BY THE APPELLANT TO ESTABLISH GENUINESS OF THE LOANS - A. A COPY OF LOAN CONFIRMATION FROM M/S MERIDIAN GEMS FOR THE YEAR ENDED 31.03.2009, 31.03.2010, 31.03,2011, AND 31.03.2012, B. RETURN OF INCOME FOR THE YEAR ENDED 31.03.2009, 31.03.2010, 31.03.2011,AND 31.03 .2012, C. THEIR BANK STATEMENT CONFIRMING THE TRANSACTION AND 8 I.T.A. NO. 1709 /MUM/2017 AND C.O. NO. 206 /MUM/2018 SHRI KRISHNAN ARUMUNGAM NAIKER D. THEIR AFFIDAVIT CONFIRMING THE TRANSACTION IS ENCLOSED. E. THE BANK STATEMENT OF THE APPELLANT FORIHE RELEVANT PERIOD. F. THE RETRACTION STATEMENT DATED 15.05.201 4 OF MR.BHAWARLAL M. JAIN. IT IS ALSO FOUND THAT THE LOANS ARE REPAID IN SUBSEQUENT YEARS, DETAILS OF WHICH ARE ALSO PROVIDED TO THE AO. IN MY OPINION, WITHOUT EXAMINING THESE DOCUMENTS AND COMMENTING UPON ITS TRUTHFULNESS OR GENUINESS, NO ADDITION CAN BE ATTEMPTED. D. LOOKING TO THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE ISSUE INVOLVED, ADDITION OF RS. 80,55,4857 - MADE U/S 68 OF THE ACT IS NOT JUSTIFIED AND HENCE DELETED. THUS, GROUND OF APPEAL NO. 3 IS ALLOWED. AFTER HAVING GONE THROUGH THE FACTS OF THE PRESENT CASE AS WELL AS ORDERS PASSED BY THE REVENUE AUTHORITIES, WE FIND FROM THE RECORDS THAT ASSESSMENT IN THE PRESENT CASE WAS MADE BY THE AO ON THE BASIS OF STATEMENTS OF SHRI BHANWARLAL JAIN AND OTHERS BY HOLDING THAT PURCHAS ES MADE FROM M/S MERIDIAN GEMS ARE JUST ACCOMMODATION ENTRIES IN THE NAME OF BOGUS UNSECURED LOANS. THE LD. CIT(A) AFTER APPRECIATING THE FACT OF THE PRESENT CASE HAD 9 I.T.A. NO. 1709 /MUM/2017 AND C.O. NO. 206 /MUM/2018 SHRI KRISHNAN ARUMUNGAM NAIKER RIGHTLY POINTED OUT THAT NO ENQUIRY WAS CARRIED OUT/CONDUCTED BY THE AO WHICH WOULD BRING IN EVIDENCE S AGAINST THE IDENTITY AND CREDITWORTHINESS OF THE LOAN CREDITORS AND GENUINENESS OF THE LOAN TRANSACTIONS. LD. CIT(A) ALSO APPRECIATED AND CONSIDERED THE DOCUMENTS PLACED ON RECORD TO ESTABLISH THE GENUINENSS OF LOAN I.E A) A COPY OF LOAN CONFIRMATION FRO M M/S MERIDIAN GEMS FOR THE YEAR ENDED 31.03.2009, 31.03.2010, 31.03,2011, AND 31.03.2012 , B. ) RETURN OF INCOME FOR THE YEAR ENDED 31.03.2009, 31.03.2010, 31.03.2011,AND 31.03.2012, C. ) THEIR BANK STATEMENT CONFIRMING THE TRANSACTION , D. ) THEIR AFFIDAVIT C ONFIRMING THE TRANSACTION IS ENCLOSED , E. ) THE BANK STATEMENT OF THE APPELLANT FOR T HE RELEVANT PERIOD AND F) THE RETRACTION STATEMENT DATED 15.05.2014 OF MR. BHAWARLAL M. JAIN. IT WAS ALSO APPRECIATED BY LD. CIT(A) THAT THE LOANS WHICH WE RE REPAID IN SUBSEQUENT YEARS AND THE ASSESSEE HAD ALSO PLACED ON RECORD THE COPY OF ORDER OF LD. CIT(A) FOR AY 2008 - 09 WHEREIN IDENTICAL ADDITIONS WERE DELETED BY LD. CIT(A) AND THE SAID APPEAL WAS ALSO CHALLENGED BY THE REVENUE BEFORE ITAT, BUT THE APPEA L OF THE REVENUE WAS DISMISSED BY ITAT. 10 I.T.A. NO. 1709 /MUM/2017 AND C.O. NO. 206 /MUM/2018 SHRI KRISHNAN ARUMUNGAM NAIKER MOREOVER, N O NEW FACTS OR CONTRARY JUDGMENTS HAVE BEEN BROUGHT ON RECORD BEFORE US I N ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LD. CIT(A). THEREFORE, WE SEE NO REASON S TO INTERFERE INTO OR DEVIATE FR OM THE FINDINGS RECORDED BY THE LD.CIT(A). HENCE , WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT (A) ARE JUDICIOUS AND ARE WE LL REASONED. RESULTANTLY, TH IS GROUND RAISED BY THE REVENUE STANDS DISMISSED . GROUND NO. 2 & 3 7 . THESE GROUNDS RAISED BY THE REVENUE ARE GENERAL IN NATURE, THUS REQUIRES NO SPECIFIC ADJUDICATION. N OW WE TAKE UP C.O. NO. 206 /MUM/2018 FILED BY ASSESSEE . 8 . SINCE WE HAVE ALREADY DE CIDED THE APPEAL FIL ED BY REVENUE IN ITA NO. 1709 /MUM/2017 ON MERITS AND UPHELD THE DELETION OF ADDITIONS. THEREFORE IN VIEW OF OUR FINDINGS, IN ITA NO. 1709 /MUM/2017 , THE PRESENT C.O. FILED BY THE ASSESSEE BECOMES INFRUCTUOUS. 11 I.T.A. NO. 1709 /MUM/2017 AND C.O. NO. 206 /MUM/2018 SHRI KRISHNAN ARUMUNGAM NAIKER 9 . IN THE NET RESULT , THE APPEAL AS WELL AS CROSS OBJECTION FILED BY THE REVENUE AND ASSESSEE STANDS DISMISSED WITH NO ORDER AS TO COST. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH DEC , 20 1 8 SD/ - SD/ - ( B. R. BASKARAN ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 26 .12 .201 8 SR.PS . DHANANJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI